On 19 April, the Chancellor of the Exchequer, Rishi Sunak, announced further information on plans to boost the UK's fintech sector in the wake of the recent UK Strategic Fintech Review (the "Kalifa Review").
To drive both national and regional growth, the announcement provided initial details on a new Centre for Finance, Innovation and Technology ("CFIT") to incubate growth in the UK's fintech sector. The CFIT, once established, will work closely with the regional hubs to identify and address sector challenges in support of fintech growth across the UK.
The Financial Conduct Authority ("FCA") will also launch the second phase of its Digital Sandbox with a specific focus on that tackle sustainable finance challenges, helping to deliver a "greener financial sector that supports the transition to net zero".
Firms exploring how to use technologies (such as distributed ledger technologies) to improve financial market infrastructure will have access to a new sandbox, similar to the FCA's Digital Sandbox, which will be delivered in collaboration with HM Treasury, the Bank of England, and the FCA.
Central Bank Digital Currency ("CBDC") taskforce
The Chancellor announced that the UK is due to establish a CBDC taskforce to explore the establishment of a national digital currency - a potential "Britcoin". The CBDC taskforce proposal is consistent with the actions of other central banks and financial institutions and, if implemented, will likely form a helpful test case for both consumer protection and privacy concerns as cryptocurrency continues to seek mainstream credibility.
Listing rules and capital markets reforms
Proposals surrounding reforms to the UK's listing regime will also be consulted on in summer 2021, with the Chancellor's announcement confirming details as to how it will take forward all the recommendations directed towards it by Lord Hill’s recently published "UK Listing Review".
The dual share class structure proposals, previously advocated for by both the Kalifa Review and Listing Review, will remain a controversial aspect of this process. For further analysis on the Listing Review's proposals, you can read our previous article on the topic here.
The update highlights that the UK government intends to set out a detailed response to the Kalifa Review in a written statement to Parliament "shortly".
The announcements by the Chancellor are a welcome indication that the UK is taking further action to ensure its place as the preeminent hub for establishing fintech businesses.
We have recently analysed the Kalifa Review's proposals in detail as part of a five-part series - you can read the first article in our series, focussing on Policy and Regulation, here.
This article was written by Martin Cook and Chris Walker, both members of Burges Salmon’s fintech practice.
If you have any questions or would otherwise like to discuss any issue raised in this article, then please speak to your usual contact or Martin Cook.
"The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre" - Chancellor of the Exchequer, Rishi Sunak